XAU/USD Outlook: Gold Extends Recovery But Break Above $1755 Required to Sideline Bears and Signal a Double-Bottom

Technical analysis of Forex market

Spot gold extends strong rebound into second consecutive day after another short-lived probe below psychological $1700 level.

The yellow metal advanced over 2.5% in two days, lifted by lower dollar and US and US bond yields, while weak US jobless data that soured the outlook and boosted its safe-haven appeal.

Gold is considered as a hedge against inflation and US President Joe Biden’s announcement of $2 trillion infrastructure plan, which has raised concerns over inflation, would be supportive for gold.

Fresh recovery is forming a double-bottom pattern on daily chart, which requires verification on lift and close above $1755 (Mar 18 recovery high).

Rising 14-d momentum indicator is about to break into positive territory and stochastic / RSI are rising and support the notion, along with formation of long-tailed hammer candle on weekly chart.

On the other side, massive weekly cloud (base of the cloud lays at $1760) weighs heavily and could limit recovery that would turn the action into mild correction before larger downtrend resumes.

The notion is supported by expectations that yields would soon resume its uptrend soon and fresh risk appetite on rising hopes of an acceleration of the US economic recovery, would fade safe haven demand.

Res: 1734; 1743; 1755; 1760.
Sup: 1724; 1712; 1705; 1700.